Is this Dambisa Moyo\’s error?

It\’s all about resources and commodities see, and the Chinese are buying it all up.

She invests her money in technology and innovation, she adds. \”And my sense is that we\’re not close to any big discovery in any of the categories – land, water, energy and minerals – that has made me not nervous about the coming headwinds.\”

That\’s really rather strange.

For we don\’t actually need any big discoveries. We need just gradual and incremental improvements.

Further, we do actually have big changes on the way. Take just one commodity, iron ore. China is driving the price here. It\’s the steel they need to build the cities. There\’s a whole slew of West African mines on the way to opening up. There\’s actually concern that even if China doesn\’t slow down that the market will become over supplied. In fact, given the low costs in West Africa and the high costs of China\’s own iron ore deposits, the thought is that some of the Chinese mines will close down.

You can go through each and every commodity out there and make much the same case.

5 thoughts on “Is this Dambisa Moyo\’s error?”

  1. Investing in both commodities and innovation is a hedging strategy.
    If innovation is successful, productivity improves, less raw material is required, commodity price goes down. And vice versa.

    I thought her previous book was good though.

  2. The only reason that we get so worked up about commodities is that supply or alternatives are so slow to react to price.

    Bringing on new supplies of oil or steel can take years, and even existing technologies can take a long time to gain full utilisation (see shale gas as an example).

    So we often forget that commodities are ruled by the laws of supply and demand just like everything else, its just that investment cycles lead to huge volatility

  3. I love this statement:

    ….no one has a clue where the energy we’ll need is going to come from…….

    Now I may well be wrong, but I can make a number of educated guesses.

    In period of massive growth in natural gas availability, huge investments in LNG infrastructure, fracking technology being utilised to exploit non conventional oil as well as gas, Iraq coming back into the picture with a vengeance, pre-salt making an appearance in Africa & central America as well as Brazil, big projects planned for the Arctic and even Norway finding new oil & gas fields, I guess Ms Moyo hasn’t been paying attention.

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